Two Techniques, One Linear Wage Curve
10 Pages Posted: 16 Nov 2017
Date Written: November 13, 2017
This note demonstrates that the special case condition, needed for a simple labor theory of value, of equal organic compositions of capital does not suffice to determine technology. Prices do not vary across techniques for both techniques in a numeric example of a two-commodity linear model of production, and they are proportional to labor values. Both techniques yield the same wage curve, in which the wage is an affine function of the rate of profits. This indeterminancy generalizes to models with more than two produced commodities.
Keywords: Labor Theory of Value, Transformation Problem, Choice of Technique
JEL Classification: B51, C67, D24
Suggested Citation: Suggested Citation